May 9, 2005

H2O to acquire Biosor Technologies

H2O Innovation (2000) has signed an agreement in principle to acquire Biosor Technologies, a company specializing in the development of wastewater treatment systems. The transaction will give H2O the exclusive rights to Biosor(TM), a technology developed over the last ten years by Quebec's Industrial Research Centre (CRIQ, centre de recherche industrielle du QuÈbec) and certified to meet standards set by the provincial Ministry of Sustainable Development, Environment and Parks (SDEP).

Biosor provides aerobic biofiltration using a fixed organic media containing primarily woodchips and peat moss. The process will be added to H2O's existing line of wastewater treatment technology products, targeting new markets such as the treatment of wastewater from the agri-food industry, slaughterhouses and hog manure.

Biosor Technologies president Elise Villeneuve said the Biosor process "will benefit from H2O's established marketing ability resulting in faster market penetration, in addition to taking advantage of a larger and cost-effective production capacity."

For H2O Innovation, "this acquisition is a unique opportunity to increase our product line in wastewater treatment technology and further consolidate the water treatment industry in Quebec. H2O will also benefit from previous marketing efforts of Biosor in Ontario and the United States," said president and CEO Guy Goulet.

The terms of the acquisition deal call for H2O to pay between $325,000 and $1,575,000 in common shares, depending on the achievement of sales objectives for the Biosor technology over the next five years. A further payment of $1.25 million on each anniversary of the transaction may be made in cash or common shares, at H2O's discretion; this payment is conditional upon the achievement of sales targets.

Since its incorporation in December 2003, Biosor has had total sales close to $100,000. To be entitled to receive all of the consideration, sales of Biosor must reach $1 million per year. Upon conclusion of the transaction (which is still subject to regulatory approval and completion of due diligence on Biosor), Ms Villeneuve will remain with H2O.

More information is available from Guy Goulet at H2O, 450/227-4771, or on the SDEP Web site www.mddep.gouv.qc.ca/eau/eaux-usees/usees/fiches/biosor.htm.

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